Marquest meeting gets fractious over Lazard Global fund

From the sound of things, a recent meeting in the offices of Marquest Asset Management Inc., a unit of Marquest Investment Counsel, was very dramatic with, apparently, lots of arguments between those in attendance.

At issue was the success — or otherwise — of a structured product offering that Marquest had brought to the market and, presumably, who is to blame for its difficulties.

The fund was the Lazard Global Convertibles Plus Fund. Lazard Asset Management LLC, a name that is not too shabby, was to be the portfolio advisor while Marquest was to be administrator. The fund was to be actively managed, and was formed to provide investors with tax-advantaged distributions paid monthly and long-term capital appreciation. The goal was to pay out 6% a year.

The fund was the second that Marquest has brought to market. Its first fund was the Marquest Canadian Equity Income Fund which closed about one year back with gross proceeds of $22.5-million. The goal was to pay out 7% a year.

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Marquest’s new fund was the first under its new chief executive officer, Michael Butler. According to the preliminary prospectus for the offering, Butler was made chief executive officer on April 16.

Butler is an industry veteran, having founded Northwest Mutual Funds Inc. and having led the 2008 merger between Northwest and the Ethical Funds Company — a firm with $5-billion of assets under management. Butler also worked with Spectrum United Mutual Funds Inc. a division of Sun Life of Canada. Butler’s career has been spent mostly in sales and marketing.

Butler’s name is on the preliminary prospectus, but given the considerable length of time it takes to develop a closed-end fund, it’s not clear how much, if any, involvement Butler had with developing the Lazard Global Convertible Plus Fund.

While no figures are available on the Lazard offering, the talk in the market is that it is running into some resistance with few expressions of interest.

“They have a way to go,” said one market participant, noting that closed-end funds have to attract $20-million in orders before they can close. The reason: the costs of maintaining a smaller-sized fund become too prohibitive. Of course Lazard/Marquest isn’t alone: there has been a reduction in the number of filings for closed-end offerings and a number of funds have been cancelled because of insufficient demand.

The answer to what happened at last Friday’s meeting was made clear by Marquest on Wednesday morning. In a release this was said: “Marquest Asset Management Inc. announces that Gerald Brockelsby, the firm’s founder, has been re-appointed as chief executive officer with immediate effect. Mr. Brockelsby replaces Michael Butler, who has left to pursue other interests.” It’s understood that Butler’s resignation was effective last Monday.

Sources close to Marquest said Wednesday that the matter was “unfortunate. It was a misunderstanding about the roles and responsibilities of the job, the scope of the responsibilities. We are now all driving on.”

Other sources have indicated that there was some resistance as to whether the market should be told about Butler’s departure, given that Marquest isn’t a public company. But Marquest manages a number of mutual funds as well as one closed-end fund. According to its website, Marquest didn’t announce Butler’s hiring two months back.